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Friday, May 23, 2014

Markets rise on economic data

Dow rose 63, advancers over decliners 2-1 & NAZ advanced 31. The MLP index lost 2+ to just over 490 & the REIT index went up 2+ to the 298s. Junk bond funds fluctuated & Treasuries rose with the yield on the 10 year Treasury near a 1 year low. Oil gained & gold pulled back lower.

Pres Putin said Russia will work with the next Ukrainian pres after elections
on Sun, even though the vote won’t meet intl standards. “But
let them hold it like that, at least,” Putin said. He said Russia wants “the situation
to calm down” & will “respect the will of the Ukrainian people.” He
spoke one day after an attack by rebels near Volnovakha left 16 Ukrainian servicemen
dead, the highest death toll for Ukraine’s forces since the separatist
conflict led by pro-Russians in the eastern part of the country began in
Mar. “After the elections, we will work with the new elected
institutions,” said Putin. Russian Foreign Minister Lavrov said earlier that Russia will wait until the results of the May
25 vote & possible runoff before making a decision on recognizing the
winner. Yet Putin’s message on the election was mixed. He also
said that “strictly speaking, under the current constitution, it’s
impossible to hold an election” because former pres Yanukovych, who fled to Russia in Feb after mass protests, “wasn’t removed from power using constitutional methods.” Putin has also put out contradictory messages on the withdrawal of what
NATO says are 40K troops deployed on Ukraine’s borders. NATO Secretary General Anders Fogh Rasmussen
complained this week that Putin has pledged pullbacks 3 times
without moving any substantial forces. Putin said May 21 the soldiers
would withdraw “when the weather is good.” OK!

Exxon Mobil, a Dow stock & Dividend Aristocrat, extended its
partnership with Russia's state-controlled oil company even as
US & European nations threaten additional sanctions to
punish Putin’s regime for its actions in Ukraine. The agreement was signed with OAO Rosneft CEO Igor Sechin today,
extending a pact that involves drilling for crude in the Arctic & Siberia & liquefying natural gas for export in Russia’s
Far East. XOM is among American oil producers that rebuffed US
State Dept pressure to skip the International Economic
Forum this week in Putin’s hometown. With at least $30B
already invested in Russia’s oil & gas sector, US &
European explorers are betting the Ukraine crisis won’t derail
their aspirations to capture some of Russia’s 75B barrels
of reserves.
Among US companies, XOM is the
biggest player in Russia, where it has a series of joint
ventures with Rosneff. It already produces oil in Russia’s Far
East with Rosneft & the 2 companies plan to start drilling
an exploration well in the Kara Sea this year. Together they
hold licenses to explore huge swathes of the Arctic Ocean. While sanctions against Russia have targeted individuals,
including Sechin, & avoided industrywide measures, the US
has threatened stronger action if Putin’s gov obstructs
the Ukraine presidential election on Sun.
Producers still plan to invest more in Russia, pursuing
exploration in the Arctic Ocean & drilling shale oil fields in
Siberia. The stock fell pocket change. If you would like to learn more about XOM,Click here for a FREE analysis of XOM and be sure to notice the intermediate time frame

Exxon Mobil (XOM)

US retailers’ Q1
earnings are trailing estimates by the widest margin
in 13 years after bad weather & weak spending by lower-income
consumers intensified competition. Chains are missing projections by an average of 3.1%, with 87 retailers (70% of those tracked)
having reported, researcher Retail Metrics said. That’s the worst performance relative to
estimates since Q4-2000, when they missed by
3.3%. Over the long term, chains typically beat by 3%. Extreme winter weather thru Feb & Mar forced
store closings & stifled sales. Lower & moderate-income consumers
had little discretionary spending power, & chains also faced
price competition from e-commerce sites. “The American consumer is not fully back and remains
cautious,” Ken Perkins, Retail Metrics’ pres, wrote. What’s more, the expectations the chains are missing have
been significantly lowered. While analysts now project
retailers’ earnings fell an average of 4.1%, back in
Jan they had estimated a 13% gain. Most retail segments are showing profit declines, with
department stores, teen-apparel chains & home-furnishing
stores faring the worst. About 41%
of retailers missed estimates, while 45% have beat. Improved weather, pent-up demand & better employment
trends may help the industry in Q2. Analysts are projecting an 8.6% gain in profit in Q2.

Stocks extended their winning steak to 3 days but volume was low. This will be a long weekend which with the important election in Ukraine, & positions need to be closed. The news about retail earnings, while no surprise, was disturbing. Of course, new months bring new data. Yield stocks have been flattish for a couple weeks, but remain near yearly highs. The tech sector, which sold off in Mar-Apr, has been inching its way back in May.

Dow Jones Industrials

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